Cryptocurrency has emerged as a disruptive force in the financial world, offering a new frontier for investment and wealth accumulation. As both businesses and private interests increasingly diversify their portfolios with digital assets, it becomes crucial to consider the incorporation of cryptocurrency into estate planning. This article explores the complexities and considerations surrounding this innovative asset class, addressing what cryptocurrency is, the challenges in estate planning, storage and accessibility, as well as tax implications.

What is Cryptocurrency?

Cryptocurrency is a digital (or virtual) form of currency. It relies on cryptographic techniques to secure transactions and control the creation of new units. The most well-known cryptocurrency is Bitcoin, but there are thousands of other digital currencies with distinct features and purposes.

Unlike traditional currencies issued by governments and central banks, cryptocurrencies are decentralised, operating on blockchain technology. This means that no single entity, like a central bank, controls the currency, making it both a revolutionary investment opportunity and a unique challenge for estate planning.

Cryptocurrency Estate Planning 

While once a novelty, in recent years it has become more common for deceased estates to include some form of cryptocurrency. Despite this increasing popularity, incorporating this asset class into an estate plan still requires careful consideration and proactive measures due to the number of inherent challenges.

Managing a deceased estate that includes cryptocurrency is more complex than administering an estate with only traditional assets. One of the challenges is that it is more difficult to prove ownership of cryptocurrency than it is traditional asset classes such as cash, shares, and real estate. In fact, identifying the existence and ownership of a cryptocurrency asset is often the greatest challenge for executors of estates involving cryptocurrency.

To help address this challenge, owners of cryptocurrency need to maintain detailed records of their holdings, wallet addresses, and private keys. Of course, this must be done in such a way that the information is kept secure during a person’s lifetime but can be easily accessed after their death. Ideally, legal documentation, such as a will or trust, should explicitly describe the nature of all cryptocurrency holdings to ensure that these invisible assets are not overlooked during the management of the deceased estate.

As part of your estate planning, you should also explain any process you have put in place for backup and recovery of cryptocurrency accounts. If something happens to you, your executor should be able to retrieve the assets without obstacle.

To help reduce complexity, your estate plan can also include information about how valuation of the cryptocurrency asset will be carried out to ensure equitable distribution among beneficiaries.

Cryptocurrency Storage

Estate planning with cryptocurrency necessitates the establishment of secure storage solutions and clear instructions for executors. Many cryptocurrency investors use offline hardware wallets to store their assets securely. If you choose this approach, you should ensure that your executor knows the location of your hardware wallet, its PIN, and recovery seed.

Other investors prefer offline paper wallets for added security – old school paper based records containing details of cryptocurrency storage and transactions. If that is your preference, you should instruct your executor on how to access and use these paper wallets.

For online wallets or exchange accounts, your estate documents should include clear guidance on how to access these assets, including login credentials, two-factor authentication details, and any other necessary information.

Tax Implications

Cryptocurrency’s tax implications are complex and can significantly impact your estate plan. Given the evolving nature of cryptocurrency regulations, we recommend consulting with tax experts and legal professionals who specialise in cryptocurrency to ensure compliance with tax laws.

Broadly speaking, in Australia cryptocurrency transactions are subject to capital gains tax, and beneficiaries who inherit cryptocurrency may incur tax liabilities when they eventually dispose of the assets. To help minimise these liabilities, adequate guidance on tax planning should be sought as part of the estate planning process.


If you own cryptocurrency, it is important to think about how to incorporate this asset into your estate planning. Cryptocurrency’s decentralised nature and its potential for growth make it a valuable asset class, but it also introduces unique challenges in estate planning.

To address these challenges effectively, it is imperative to educate your chosen executor on cryptocurrency, establish secure storage and accessibility procedures, and understand the tax implications associated with digital assets. Seeking guidance from experts in the field, including financial advisors, cryptocurrency tax specialists, and legal professionals, is key to creating a robust estate plan that accommodates this revolutionary asset class.

This is general information only and you should obtain professional advice relevant to your circumstances. If you or someone you know wants more information or needs help or advice, please contact us on 0407 534 594 or 0407 171 626 or email [email protected].

Need legal advice? Catron Simmons can help.